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If your employee is set to pay PCB and SOCSO/EIS then the PCB calculation changes slightly every month. The reason for this is due to the way the SOCSO and EIS employee contributions are deducted in the PCB formula:

SOCSO/EIS are treated as non-recurring items in the PCB calculation (ie. happening only that particular month and not for every month of the year) so that the tax is slightly higher than it would be had the SOCSO/EIS been treated as a recurring item. That is why the annual tax and PCB reduce slightly every month as the provisional annual chargeable income reduces due to the additional deduction.

A simple illustration:

In the PCB formula, the EPF is added as recurring every month but the SOCSO/EIS deduction is added as non-recurring. So let’s say the monthly salary is RM5,000 and EPF deduction RM200 and SOCSO/EIS deduction RM20.

Jan payroll:
annual chargeable income = (5,000 salary – 200 EPF)*12 – 9,000 personal deduction – 20 Jan SOCSO/EIS = 48,580

Feb payroll:
annual chargeable income = (5,000 salary – 200 EPF)*12 – 9,000 personal deduction – 20 Jan SOCSO/EIS – 20 Feb SOCSO/EIS = 48,560

Mar payroll:
annual chargeable income = (5,000 salary – 200 EPF)*12 – 9,000 personal deduction – 20 Jan SOCSO/EIS – 20 Feb SOCSO/EIS – 20 Mar SOCSO/EIS = 48,540

As you can see, the annual chargeable income on which the tax is calculated reduces every month and as a result the PCB reduces as well.

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